Commercial real estate landlord Custodian REIT (CREI) is a real estate investment trust with a difference in that it chases the smaller assets that normally slip under the radar of the bigger players. Working predominantly in the regional property market, Custodian has been picking up assets less affected by demand pressures. So while there was yield compression of 93 basis points in the broader property market over the past three years, Custodian’s assets have witnessed only 30 basis points of compression over the same period.
In future, rental growth will pick up the baton, according to investment manager Richard Shepherd-Cross, who points out that the Investment Property Forum is forecasting average rental growth of 2.45 per cent a year for the next four years. This supports Custodian's strategic focus on income, and with a progressive dividend policy, it now expects to achieve its target of paying 6.25p per share in dividends for the year to March 2016 - a yield on the current share price of nearly 6 per cent.
A total of 14 acquisitions were made in the first half, with total investment of £23.4m funded by a £14.3m placing and a £20m loan. And after the half-year, Custodian announced plans to raise a further £50m through a share placing, with an option to increase this to £75m.
CUSTODIAN REIT (CREI) | ||||
---|---|---|---|---|
ORD PRICE: | 106p | MARKET VALUE: | £205m | |
TOUCH: | 104.5-106p | 12-MONTH HIGH: | 110p | LOW: 104p |
DIVIDEND YIELD: | 5.4% | DEVELOPMENT PROPERTIES: | nil | |
PREMIUM TO NAV: | 3% | |||
INVESTMENT PROPERTIES: | £233m | NET DEBT: | 16% |
Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2014 | 99.6 | 3.3 | 2.5 | 2.5 |
2015 | 103 | 7.9 | 4.3 | 3 |
% change | +3 | +143 | +72 | +20 |
Ex-div: 26 Nov Payment: 31 Dec |